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MEMBER DIARY

State of Crude Oil Refining in the U.S.

Don't listen to the Newtron crowd

Some folks are still all in a huff that we have not built a new refinery in the U.S. in decades. Yesterday I decided to do some checking about overall capacities in the 50 states of the United States and here are the changes that I found from 2002 to now.

Note: BPD = Barrels at 42 gallons of each Per Day, TPD = Short (2000 pounds) Tons Per day

Let’s take a look at the above list and changes to find that we have built the equivalent of 3 or more major refineries since 2002 via expansions (some which were to add a new refinery to an existing refinery).

By what types of process units saw capacity changes above 5% we see that we are utilizing much more crude oil from Canada which is very heavy oil, and not just the syncrude, but bitumen pumped out of the ground.

Sulfur production comes from removing the sulfur from the oil products in hydrocracking and hydrotreating with much of this coming from additional sulfur removed to make Ultra Low Sulfur Diesel.

Much of the price increases of gasoline and diesel over the last 40 years have been for two reasons, increased cost for sulfur removal, far fewer simple refineries where a lighter crude oil with almost no sulfur can be simply cooked and distilled with some anti-knock additives added. Today’s refineries utilize oil which no one really wanted 40 years ago due to complexity and cost to refine. If crude oil were still $6 per barrel, you’d be paying at least 50 cents per gallon for gasoline even without new regulations regarding use of unleaded and lower sulfur fuel.

BTW, we have exported refined products for a very long time. Mexico and Canada have long been buyers of gasoline and diesel. The world has been buying our petroleum coke for decades now, since we produce far more than the U.S. market can absorb. In the case of Mexico, PEMEX has long had agreements with U.S. refineries where they invest money into plant expansion and provide a stream of crude oil and in return receive refined products. In 1992 during a meeting with the head of PEMEX’s refining division, he informed me that they were building 3 brand new 150,000 BPD refineries and still needed an additional 50,000 BPD of gasoline. They had just signed a contract with Shell to do just that for them.